Internal Memos Show Belt-Tightening at Hewlett-Packard

The books must be looking a little dicey inside some sections of computing and IT giant Hewlett-Packard. Judging by the contents of two internal memos I obtained, the company started tightening its belt in mid-March in two regional divisions of its Personal Systems Group, the business unit that sells PCs.

In the first of two memos below, Joshua Brenkel, head of PSG for the Asia/Pacific and Japan region, orders a freeze on new hires during the second and third quarters.

In the second, Guillaume Gerardin, finance director for PSG Europe-Middle East and Africa, institutes a freeze on operating expenditures (OPEX) “until further notice.” It includes a freeze on travel unless the trips are specifically approved by him or by Eric Cador, the group’s senior vice president. It also orders a hold on new marketing programs.

To place these memos in their context of recent events at HP, they were both circulated to relevant employees mere days after the March 14 HP summit at which HP CEO Léo Apotheker set out his big cloud-centric strategy for the company.

The dates on the memos are also mere days before the close of the first calendar quarter, one in which PC sales were said to be getting hammered, according to market surveys by both IDC and Gartner, thanks once again to the iPad.

I’m told from the source who sent me these memos that others like them went out around the same time in other divisions within HP. That said, I haven’t seen any others like it. HP, by the way, reports quarterly earnings a week from today. Analysts expect it to report per-share earnings of $1.21 on sales of $31.5 billion. Clearly someone is worried about something.

HP declined to comment, citing its quiet period before reporting earnings.

Over the course of the past five quarters we have significantly invested in building our teams through sales coverage plan and have added over 370 net new team members to PSG APJ. Due to business conditions, our current revenue forecast, sales productivity versus other regions and OPEX plans, we need to implement the following immediately:

Hiring Freeze (Q2/Q3)
all new positions
all replacement positions
all ETW/contractor positions including extensions
all the above is inclusive of all current open/sourcing requisitions

Process
We will put all roles on hold effective tomorrow all current requisitions
All pending starts (offers extended and accepted) will continue
Finance in process of deploying 2H OPEX
Productivity analysis underway including ETWs/Contractors
Communicate live with your teams so they understand clearly the business context

We recognize there will be a select number of mission critical positions that we will need to go forth with. Thus, we will put in place the following exception process:

Exception Process
Country/Region HR Lead should submit the following attachment which has been approved by the L3 to Damien Hsu by March 24th and ongoing to Damien Hsu by the 20th of each month.
Jos/HR/Finance will review monthly

Overall, this is a very good opportunity for us to step back and ensure our organizations are aligned and efficient as well as all our talent is achieving the revenue/results we are capable of and expect.

Further to Eric’s message on March 18, this is to confirm that, in order to offset our revenue and resulting gross margin challenges, we are on Opex freeze in PSG EMEA until further notice. Effective immediately, the following measures must be strictly adhered to:

– Travel Freeze:
-No travel for internal meetings, unless otherwise approved by Eric or Guillaume.
-Travel for customer meetings/visits can continue but should be reviewed for maximized return.
– All requisitions are on hold — see attached message from Elizabeth with more details
– Marketing programs — under review for Q2. No marketing program should be engaged and committed for next quarters without formal approval from Eric.

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